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Homework answers / question archive / How does the payment of rent for equipment affect the accounting equation? a
How does the payment of rent for equipment affect the accounting equation? a. assets increase; assets decrease b. assets decrease; stockholders' equity decreases c. assets decrease; liabilities increase d. assets increase: stockholders' eauitv increases
As we know that
Total Assets = Total Liabilities + Total Stockholders Equity
When the company pay for rent, it reduces its cash and cash is an asset. So, asset side will reduce. It decrease shareholders' equity due to a decrease in income, rent expenses decrease income.
So, the payment of rent for equipment decrease assets and stockholders' equity.
Correct option is "B".
